WynnBet continues to cut losses as Wynn gears up for Massachusetts sports betting launch
Wynn reported continued balance sheet improvements for its online gaming division during the company’s Q3 earnings call Wednesday ahead of a highly-anticipated launch in Massachusetts.
Wynn announced nearly ($18m) in adjusted EBITDA losses from its Wynn Interactive digital gaming division the third quarter of 2022, an improvement from ($70m) in losses from Q3 2021. The company has lost ($104m) on its online properties through the first nine months of 2022, compared to ($188m) during that same time frame in 2021.
WynnBet posted similar overall online sports betting and casino handle figures in Q3 2022 and Q3 2021 despite a roughly 90% decrease in marketing and an 80% decrease in cash burn year-over-year, Wynn CEO Craig Billings said during his company’s earnings call.
In Massachusetts, the company is set for its most consequential sports betting launch since the company announced a dramatic shift in its digital gaming strategy roughly a year ago. Wynn has spent several billion dollars on its Encore Boston Harbor property, located just outside Boston city limits and has hoped to translate that to success for its digital gaming platform in the state.
Wynn officials have said for months they see Massachusetts as a key market for the sportsbook, which has been a relatively minor player in the overall digital gaming landscape. The WynnBet retail sportsbook at Encore Boston Harbor could open as early as January, several months before online platforms begin.
This early start, the location within the region’s largest metro area plus the existing casino customer data base has Wynn officials optimistic Massachusetts could be one of if not WynnBet’s strongest sports betting market in the US.
WynnBet is live in nine states: Arizona, Colorado, Indiana, Louisiana, Michigan, New Jersey, New York Tennessee and Virginia. Billings said during Wednesday’s call he remained encouraged by WynnBet’s online gaming success in New Jersey and Michigan, the only two states it operates in with legal digital casino gaming.
$WYNN adjusted property EBITDA losses for its WynnBet online sports betting and iGaming division:
Q3 2022: ($18m)
Q3 2021: ($104m)
Q1 – Q3 2022: ($70m)
Q1 – Q3 2021: ($188m)
— Ryan Butler (@ButlerBets) November 9, 2022
West Virginia and Pennsylvania are the only two other states with open, competitive commercial online casino gaming markets, though WynnBet has not yet gone live in either. The company also has made no mention of an online launch in Ohio or Maryland, two online sports betting-only states that nevertheless are each expected to house as many as two-dozen sportsbooks.
Once seen as a possible US sports betting handle market share leader, Wynn has pivoted its plans for digital gaming from becoming a top national revenue driver to a compliment to its brick-and-mortar properties in both Massachusetts and Las Vegas. That has led to a dramatic cut down in advertising, free bets and other player audition costs.
Company officials said Wednesday that the disciplined approach toward marketing and promotions has helped curtail WynnBet losses, a strategy that will continue going forward. Though several competing digital gaming operators have announced timelines for EBITDA-positive quarters, Billings said there is still no firm time frame for WynnBet.
Taking questions during Wednesday’s earnings call, Billings said profitability could be further delayed by user acquisition costs in Massachusetts in the months leading up to the state’s online sports betting launch, which is expected as early as March 2023.
During the call Billings also touched on the recent stock purchases by Golden Nugget casino owner Tilman Fertitta, which saw the stock spike shortly after the purchase was disclosed publicly.
“It’s a great recognition in the value of our equity. There’s not much more to say,” Billings said.
Overall, Wynn operating revenues were $890m for the third quarter of 2022, a decrease of $105m from the third quarter of 2021. Net loss attributable to Wynn was $143m or $1.27 per diluted share, for the third quarter of 2022, compared to net loss of $16m, or $1.45 per diluted share, for the third quarter of 2021.
The revenue losses came despite a new third-quarter record for adjusted property EBITDA at Wynn’s North American properties. Billings attributed the company’s financial declines largely to continued COVID-19-related travel restrictions and shutdowns in the company’s Asian markets.